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What is APR?

Helping first-time homebuyers understand the term Annual Percentage Rate (APR).

Categories: None | Tags: First Time Homebuyer, Glossary, Loans

November 27, 2011  |   Share:

What is equity?

Helping first-time home buyers understand the real estate terms "equity", "LTV", and "FMV".

Categories: None | Tags: First Time Homebuyer, First Time Homebuyer, Glossary, Loans, What Is

November 20, 2011  |   Share:

What type of home ownership help is available for US Vets?

Helping US Vets.

Categories: None | Tags: Home Buyer Education, First Time Homebuyer, Home Ownerhship, Veterans

November 11, 2011  |   Share:

What is a Realtor®?

Helping the first-time home buyer understand the term and role of a Realtor®.

Categories: None | Tags: First Time Homebuyer, Tips, How To, Glossary, How To Buy A House

November 2, 2011  |   Share:

What is HUD?

Helping first-time homebuyers understand the meaning of HUD.

Categories: None | Tags: First Time Homebuyer, Mortgages, Assistance, Glossary, Fha, Loans

October 26, 2011  |   Share:

What is MLS?

Helping first-time homebuyers understand the term Multiple Listing Service (MLS)

Categories: None | Tags: First Time Homebuyer, How To, First Time Homebuyer, Glossary, How To Buy A House

October 24, 2011  |   Share:

What is a mortgage?

Helping first-time buyers answer the question "What is a mortgage?"

Categories: None | Tags: First Time Homebuyer, Tips, How To, Glossary, Glossary

October 20, 2011  |   Share:

What is FHA?

Helping first-time homebuyers learn about FHA and FHA loans.

Categories: None | Tags: First Time Homebuyer, Fha 203k, Glossary, Fha, Glossary, Loans

October 12, 2011  |   Share:

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Community Reinvestment Act Does Good
Posted by Jon Gail on August 1, 2011 

Despite what you may have heard, Jimmy Carter and the Community Reinvestment Act (CRA) of 1977 did not cause the current mortgage crash we are experiencing.  In fact, the CRA has done very good things especially in the area of mortgage lending.  

The CRA essentially requires federally regulated banks to offer their services to all of their clients regardless of their income throughout their service area.  In other words, the banks are not permitted to just serve the wealthier clients or wealthier areas within their service area. 

A bank’s CRA rating is very important to them.   The CRA rating is carefully considered by federal regulators when the bank is requesting permission to add a branch, expand their service area or to acquire or merge with a financial institution. To learn more about CRA and to find out a bank’s CRA rating visit www.ffiec.gov/cra

To fulfill their CRA responsibilities’ most of the larger federally regulated banks have created special CRA home loan programs sometimes referred to as a “portfolio product.”  These programs typically offer special terms and features like lower down payment requirements, favorable underwriting standards, lower mortgage insurance premiums, compatibility with down payment assistance programs and the like.

CRA home loan programs are available from larger banks like Bank of America, Chase, Key Bank, Wells Fargo and US Bank among others.   While these home loan programs are not typically limited to first-time homebuyers they are great programs for low-income first-time homebuyers.

To qualify, a household must be low income (80% of the median income for the area) or they need to purchase and occupy a home in a low to moderate income area.   Of course there are many other requirements to qualify as well but each bank's requirements differ so check with them directly to learn more.

 These types of CRA home loan programs are not always well marketed and are not always available from every loan officer at the bank.  So you may need to be fairly persistent to learn more about these programs and to find which loan officers are approved to offer them.  

As a first-time homebuyer you want to make sure you learn about all your options and checking out the big banks' CRA home loan products should be on your to do list. 

Thank you  Jimmy Carter and Congress’ for passing the Community Reinvestment Act of 1977.  As a result, the banks'  CRA home loan programs do very good things for first-time homebuyers in the United States.

First-Time Homebuyer Blog

Posted by admin on June 11, 2011

Don’t Knock Out First-Time Homebuyers
Posted by Jon Gail on July 25, 2011

This year there has been a lot of talk in Congress about turning back the clock on mortgage lending requirements and forcing consumers to save up a 10 to 20% down payment. I support concepts that better prepare first-time homebuyers to be successful homeowners, but increasing the down payment requirements is a bad idea.  Forcing homebuyers to come up with a 10 to 20% down payment would knock most first-time homebuyers out of the real estate market.

Imposing a 20% down payment requirement would cause most first-time homebuyers not to be able to purchase a home for decades to come.  In the August 8, 2011 issue of Time Magazine, the article Path to a Picket Fence (pg 17.) Time predicts that it would take an average firefighter as much as 18 years to save up a 20% down payment to buy a median priced home of $172,900 assuming a 5.2% savings rate.  Time also estimated it would take the average Residential Construction Worker as much as 20 years to save up a 20% down payment. 

 Instead of mandating larger down payments, Congress would do better to consider mandating homebuyer education, counseling and affordable loan products instead.  Recently in a study called Homeownership Education and Counseling: Do We Know What Works, the Research Institute for Housing America researchers observed that in many studies homebuyer education and counseling was shown to significantly reduce default rates.  While not 100% conclusive, these results sound promising to me.

Homebuyer education classes are widely available and help consumers make informed decisions, but Congress has cut the Housing Counseling funding that helps fund them.   To ensure homebuyer education and counseling is widely available, Congress needs to restore the Housing Counseling funding which was completely slashed out of this year’s and next year’s federal budget. 

 To better understand default rates and how to address this risk, Congress should instead examine default rates by loan types.  A recent study by the Federal Reserve Bank of Dallas shows that the percent of serious delinquent loans at the end of 2010 for “conventional subprime loans” was around 19% while “conventional prime loans” was around 3%.  When you compare default rates for fixed rate loans to the other types of loans you see similar differences.  So if Congress wants to make a dent on mortgage defaults, why not focus legislative attention on limiting the availability of high risk loan types instead?

Clearly increasing consumer access to reliable, accurate, and unbiased homebuyer information and long-term affordable loan products is a low cost and effective way of helping consumers succeed as homeowners. Restoring old school massive down payment requirements though would be a knock out punch for first-time homebuyers.


Six Quick Tips to Buying a Foreclosure
July 15, 2011

First-time homebuyers are drawn to buying a foreclosed property because they can be great deals.  It is true that some foreclosed properties can be purchased at significant discounts.   First-time homebuyers, however, need to do their research and be prepared in order to successfully pick up a sweet deal on a foreclosed property.  Here are six quick tips that may help you land a great deal on a foreclosed property:

  1. Know Your Competition. - As a first-time homebuyer you are likely going to be bidding for properties against all-cash investors.  These investors can close deals quickly; they don’t typically ask the seller to make any repairs; and there is less risk to them for a sale fail.  So you and your real estate agent will need to structure your deals to close as soon as possible, avoid any requested repairs, and have a solid pre-approval before you make an offer.
  2. FHA 203 K Loan-Many foreclosed properties will need repairs before you can live in them, but most home loan programs will not let you finance a home unless it meets their minimum property standards.  You’ll need a home loan program like the FHA 203 K loan that allows you to finance both the acquisition and repairs.  Also make sure you get a solid pre-approval before you start shopping.
  3. Choose Your Loan Officer Carefully - If you end up going with the FHA 203 K loan, make sure you are working with a loan officer who has a lot of experience offering this specialized program.  You do not want to be a loan officer’s guinea pig (no offense to guinea pigs, but you know what I mean).
  4. Don’t Fall In Love - While there are a lot of foreclosed properties on the market, depending on your real estate market you may have to submit a lot of offers on just to get one.   The banks and mortgage investors, who own these foreclosed properties, don’t care who they sell to as long as the home is closed quickly and for a maximum return.  
  5. NSP not ESP-NSP stands for Neighborhood Stabilization Program.   This is a homebuyer assistance program funded by the U.S Department of Housing and Urban Development (HUD). NSP is a program designed to convert vacant foreclosed homes in areas hardest hit by the foreclosure crisis into being owned and occupied again.  Your local state, county or city housing agencies may have NSP funds your area has been hit particularly hard by the foreclosure crisis.  Give them a call to see if they have (or expect to have) any new NSP funds in your area.  For more info about NSP visit http://hudnsphelp.info/.
  6. Short Sales are not Short-Limit your search for homes to foreclosed properties and stay away from short sales.  A short sale is a transaction where the seller is trying to sell a financed home, for an amount that is well short of the amount owed to the lender. In general short sales usually take months longer to work through and, if the seller and buyer are too far apart, may never work out.

Hopefully these six quick tips help you either buy a foreclosed property or steer clear of them altogether.  If you want to keep the conversation going,  make comments or ask questions below.

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Why didn't somebody tell me about this program?
July 11, 2011

Today is the first official day on the Web for FirstHomeAdvisor.com.  The new site is  designed to help first-time homebuyers learn about buying a home of their own.  It introduces visitors to some of the many partners and programs througout the United States that are available to help.  The site aims to help visitors avoid asking,  "Why didn't somebody tell me about this program before I bought my first home?" 

Over the past two decades working for a few different state, local and non-profit housing agencies I have fumbled through a response to this question many times.  I find it to be a tricky question to answer for fear of offending the person asking the question or the professionals they chose to work with to buy their first home.

The reason many first-time homebuyers don't learn about these programs is due to a general lack of awareness about them or an unwillingness on behalf of some lenders and real estate agents to offer them. 

Fortunately for the educated consumers, acessing these programs is not that hard.  Half the battle is just knowing these programs exist, and the other half is learning how to access them.  FirstHomeAdvisor.com was designed to do both.  I hope you find the new site to be a helpful resource on your way to a home of your own.

I value your feedback, comments and questions.  Feel free to post your comments below or join us on our Facebook page.  Thanks for visiting FirstHomeAdvisor.com on your way to a home of your own!

FirstHomeAdvisor® is owned by FirstHomeAdvisor LLC.